Rise in detected EU fraud put down to better controls

Date: 08/05/1997

THE level of detected fraud in the EU increased by 18&percent; last year, with the latest evidence suggesting that over half of the money lost ended up in the coffers of organised crime gangs.

Fraud cost the Union 1.3 billion ecu in 1996 - 1.6&percent; of the total EU budget - compared to the 1.1 billion reported in 1995.

But Anti-fraud Commissioner Anita Gradin argues that the increase is, in fact, a positive sign.

“I know that the increasing figures for reported fraud and irregularities are a result of the huge efforts we have put into reorganising and improving

the Commission's anti-fraud measures. Member states have put much more work into the fight against fraud,” she said.

The vast majority of fraud investigations are handled by national authorities, with the European Commission taking a direct role in only 5&percent; of the 4,500 cases looked into last year.

Gradin stressed, however, that the small number of investigations the institution helped to coordinate involved over half of the missing money.

“This clearly shows that well-organised international crime syndicates are responsible for a large proportion of the losses of EU money. These gangs do not only defraud the EU. They are often engaged in other types of crime such as trafficking in human beings, car theft and money laundering,” she said.

Cigarette smuggling was once again a key problem area, with national governments reporting total losses of 800 million ecu in customs duties, excise and value added tax as a direct result. Coupled with alcohol smuggling, the total loss to member state budgets amounted to around 1 billion ecu.

The Union's massive agricultural budget is another favourite target and last year was no exception. The Commission estimates that 345 million ecu was lost in 1996 through fraudulent claims for EU farm funds.

Outlining the Commission's plans for continuing the fight against fraud between now and the end of 1998, Gradin said: “The Union has started to create a legal framework to protect its funds and to ensure that criminals are punished. But still more has to be done to secure our taxpayers' money.”